Srinagar is popular for its houseboats, which do not float free around the lake, but are anchored off-shore. It is a great and unique way to enjoy your stay in the city. Houseboats are accessible either by road, or by a short "Shikara" boat ride. Each houseboat usually has 2-5 bedrooms plus bath, dining room, living room, upper deck good for sunbathing.
Many travelers tell stories of bad experiences while staying on a houseboat, others enjoy their stay greatly. To avoid bad experiences do not pre-book a houseboat before arriving. With the security situation, the majority are empty and you should be able to get a better price in person, and to get a better feeling of if you'll like the place and the owners. Boats with land access have the advantage of allowing you to leave if you feel uncomfortable, or just like going for a walk, although they tend to be noisier.
There are houseboats on Dal Lake and Nagin Lake. These can cost anything from Rs 1,000 March 2008 - Rs 5,000 depending upon the time of the year. Houseboats on Nagin lake are upscale and more expensive but are much more beautiful, and the Nagin lake location is serene. Price on Nageen Lake per person in Sept 2005 was Rs 500 per night including 2 meals. Expect to pay up to Rs 3,000 for a couple on the deluxe boats. Boats on the Jhelum river are cheaper yet, but still comfortable, and close to the bus station, good if you are just transiting Srinagar to or from Ladakh.
Be sure to take a 1 hour boat tour of the lake inlets to get a nice glimpse of life and wildlife along the lake. Prices are about Rs 300-500 per trip. A few areas are geared up for attracting tourists, but most much of the area is still reasonably untouched.
There are a wide range of hotels around Dal Lake. Prices vary from Rs 500-5,000.